Transition payment tax how much do you keep net in 2026

Transition payment and tax: what do you keep net?

You are facing dismissal and are told that you are entitled to a transition payment. Good news — but the question that quickly arises is: how much will you actually keep after the Dutch Tax Authority has taken its share? The answer depends on your total annual income and the tax bracket you fall into. In this article you can read how the tax treatment works, what you can expect, and what options exist to reduce the tax burden.

Transition payment as taxable income

The Dutch Tax Authority (Belastingdienst) treats the transition payment as income from previous employment. This means that the amount is added to your other annual income and subsequently taxed under the progressive income tax system in box 1. You therefore do not pay a separate 'dismissal tax', but the standard income tax rate that applies to your total income in the year of dismissal.

When your employer pays out the transition payment, they will immediately withhold wage tax using what is known as the special remuneration table. This is an estimate based on your known annual salary. The definitive tax amount is only determined when you file your income tax return. This may mean you receive money back afterwards, but it may also mean you have to make an additional payment.

Tax rates in 2026

In 2026, three tax brackets apply to box 1 income. The transition payment is taken into account when determining which bracket you fall into:

• Tot en met € 38.883: 35,75%
• From € 38,883 up to and including € 78,426: 37,56%
• Boven € 78.426: 49,50%

Suppose that in the year of dismissal you earn € 40,000 in salary and receive a transition payment of € 20,000. Your total income would then be € 60,000. On the portion of the transition payment that exceeds the upper limit of the first bracket, you pay the higher rate of 37.56%. Part of your transition payment may therefore fall into a higher bracket than your regular salary would ordinarily reach. Bear in mind also that tax credits may be reduced as your income increases, which further raises the effective tax burden.

How much will you keep after tax

A rule of thumb that many people find useful: on a modal income you broadly retain around 60 to 63% of your transition payment net. Those with a higher income who consequently fall into the highest tax bracket will, in the most favourable scenario, retain around 50%. The higher your total annual income, the greater the proportion that goes to the Belastingdienst.

The maximum transition payment in 2026 is €102,000 gross. If your annual salary exceeds this amount, one gross annual salary applies as the maximum. A considerable amount will therefore be deducted from the figure stated in your settlement agreement before it reaches your account net.

Would you like to know exactly how your transition payment is calculated? Read more on the page transition payment.

Special rate and the income tax return

Your employer calculates the wage tax upon payment using the special rate. Because your employer does not know at that point what your total annual income will ultimately be, they use an estimate. This can sometimes result in an amount that is too high, as your employer may apply the highest rate of 49.5% as a precaution. This is corrected through your income tax return, and you will never pay more than the rate that corresponds to your actual total income.

Always check when filing your tax return whether the correct rate has been applied. Errors in the withholding occur more often than you might think and can work either in your favour or against you.

Managing the tax on your payment wisely

There are a few ways to reduce the tax burden on your transition payment, or at least to optimise it. Here are the most practical options:

• Training or outplacement via the employer: If your employer pays the costs of a training course or outplacement directly and these are deducted from the transition payment, you will not pay income tax on that portion. This provides an immediate benefit.
• Annuity or bank savings: If you do not need the transition payment immediately, you can invest a portion in an annuity insurance policy or a bank savings account. Under certain conditions, that premium is tax-deductible, which reduces your taxable income.
• Payout timing Are you being dismissed late in the year and do you expect a lower income next year? If so, discuss whether payment in the following calendar year is possible. A lower total income means a lower tax bracket.
• Inkomstenmiddeling: If the payment causes you to fall into a higher bracket on a one-off basis, you can spread your income across three consecutive years through the Belastingdienst. Please note: the difference in tax must be at least €545 and you can only apply for this after receiving all final assessments for those three years.
• Controleer de berekening: Always have the transition payment in your settlement agreement checked to ensure it has been calculated correctly. An error in the gross amount has a direct impact on the net amount you receive.

Regarding the stamrecht scheme

Until 2014, employees could defer tax liability through a stamrecht-BV or stamrecht account. That scheme no longer exists. In 2026 too, there is no possibility of deferring tax on the transition payment in this way. Bear this in mind if someone advises you to do so, as it is no longer legally applicable.

Why Employment Lawyer Eindhoven

At Arbeidsjurist Eindhoven, we know that dismissal is stressful enough without unpleasant surprises for your wallet on top of everything else. We help employees in Eindhoven and the rest of Brabant to understand exactly where they stand financially upon dismissal: from the amount of the transition payment to its tax implications. Would you like to know what your net payment realistically means for you, or would you like us to review your settlement agreement? Feel free to contact us with no obligation. We are happy to think things through with you.

Frequently asked questions

Do I have to pay tax on my transition payment?

Yes. The Dutch Tax Authority (Belastingdienst) treats the transition payment as income from previous employment. The amount is added to your other annual income and taxed in box 1 at the progressive income tax rates. Your employer deducts payroll tax directly upon payment and settles this using the special rate.

How much tax will I pay on my transition payment in 2026?

It depends on your total annual income including the payment. In 2026, three tax brackets apply: 35.75% up to €38,883, 37.56% between €38,883 and €78,426, and 49.50% above €78,426. The transition payment counts towards determining which bracket you fall into.

What is the maximum amount of the transition payment in 2026?

The maximum transition payment in 2026 is €102,000 gross. If your annual salary exceeds €102,000, one gross annual salary applies as the statutory maximum. This amount has been index-linked compared to 2025, when the maximum was still €98,000.

Can I save tax on my transition payment?

There are a few options. If your employer pays costs for training or outplacement directly via the transition payment, you do not pay income tax on that portion. Putting part of the amount into an annuity or bank savings account can also be tax-advantageous. Always seek advice on what yields the most benefit in your particular situation.

What if my employer has withheld too much tax on my transition payment?

This can be corrected straightforwardly. Your annual income tax return calculates the definitive tax liability based on your actual total income. Any tax overpaid will be refunded to you, but you may also receive an additional assessment if too little was withheld.

We are happy to think along with you. For advice tailored to your situation, we would be glad to talk. No rights can be derived from the content of this page and it may contain inaccuracies.